UBS chairman joins in bitcoin bashing by bankers

ZURICH (Reuters) - UBS Chairman and former Bundesbank President Axel Weber said on Wednesday bitcoin does not fulfil some of the most important functions of currency, the latest senior banker to express scepticism about the cryptocurrency.

The logo of Swiss bank UBS is seen at a branch office in Basel, Switzerland March 29, 2017. Picture taken on March 29, 2017. REUTERS/Arnd Wiegmann

“I get often asked why I‘m so skeptical about bitcoin, it probably comes from my background as a central banker,” Weber said at a conference organized by the Swiss Finance Institute.

“The important function of a currency is, it’s a means of payment, it has to be generally accepted, it has to be a store of value and it’s a transaction currency. Bitcoin is only a transaction currency.”

Bitcoin is a digital currency that enables individuals to transfer value to each other and pay for goods and services bypassing banks and the mainstream financial system.

While banks have largely steered clear of bitcoin since it emerged following the financial crisis, the virtual currency has a range of supporters, including technology enthusiasts, libertarians skeptical of government monetary policy and speculators attracted by its price swings.

Weber was more upbeat about blockchain, which was first developed to power bitcoin and is a shared ledger of data that is maintained by computers rather than a central authority, and said over time the idea of a digital ledger would be widely accepted.

Earlier on Wednesday, Commerzbank AG, Bank of Montreal, Erste Group Bank AG and CaixaBank SA said they had joined an initiative launched by UBS and IBM Corp aimed at building blockchain-based technology to support trade finance transactions.